Statehouse Beat: Dubious lottery licenses

CHARLESTON, W.Va. -- Given that limited video lottery traces its origins to the quasi-illegal gray machine gambling of the 1980s and '90s, it's not surprising when LVL machine distributors and retailers attempt to bend state Lottery rules, but testimony to the Lottery Commission on faux fraternal operations was flabbergasting.

Such as Princeton Fraternal Order of Police president Bryan Grimm admitting he's never been to his FOP's "lodge," a video slots facility located three hours away in Harrisville, Ritchie County, and effectively operated by Action Gaming, a video lottery machine distributor based in Wheeling.

Action Gaming was the common thread of the four fraternals called to testify in show cause hearings before the commission last week.

The others were the Monongalia-Preston County FOP, whose "lodge" is in New Martinsville, Wetzel County; the Marshall County FOP, which also has a "lodge" in New Martinsville, across the street from the Mon-Preston gaming hall; and the West Virginia Vietnam Veterans of America state council, based in Huntington, whose "lodge" is in Weirton, Brooke County.

(The president of the Marshall County FOP, Ed Vogler, refused to appear before the Lottery Commission unless subpoenaed. Commissioners responded Friday by ordering that the 10 LVL machines at the FOP's gaming hall be turned off.)

I spoke briefly Friday with Action Gaming owner David Shriver, who called the Lottery's investigation a "witch hunt."

According to testimony, Action Gaming solicited business from each fraternal to operate a 10-machine LVL facility, offering a "turn key" operation, providing everything from "lodge" locations to employees to staff the gaming halls.

All the officers of the fraternal organizations have to do, apparently, is sign a contract and pay all the salaries and expenses.

Princeton FOP officers testified they are losing money on the arrangement. Indeed, the FOP's 2010 IRS 990 filing shows that it had $44,919 in revenue, $51,503 in expenses, and a operating loss of $6,584.

The 990 listed the Princeton FOP's address as 68 18th St. Wheeling, which is -- you guessed it -- the headquarters of Action Gaming.

While Lottery records show the FOP's share of LVL profits for the last four months totaled about $24,800, Grimm testified the FOP lost money each of those months, after salaries and expenses were deducted -- losses he said Action Gaming covers through loans to the FOP.

Lottery officials began looking into the organizations after complaints from bar and club owners, who are limited by law to a maximum of five LVL machines, that LVL machine distributors were setting up faux fraternals in order to have 10 machines per location.

Lottery Director John Musgrave said the four entities issued show cause notices last week drew attention since the "lodges" were all located some distance away from the fraternals. He said Lottery commissioners plan additional show cause hearings, and will probably call a special meeting next month to determine what actions will be taken against the organizations and machine distributors.

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Speaking of the Lottery, the big news out of the Legislature last week may have been the governor's bill to cut Lottery appropriations $39.12 million a year, or a 15 percent for most statutory funding recipients (SB385, HB4266, HB4333).

That includes cutting the nearly $100 million a year in Lottery funds to underwrite thoroughbred and greyhound racing purse and breeders funds, which I thought would bring thoroughbred owners and breeders en masse to the Capitol.

While there have been calls in the past to cut the corporate welfare to the horse and dog breeders and owners, the bill also imposes a 15 percent cut on appropriations to cities and counties with racetrack casinos -- a strategically questionable move.

Kanawha County Commission President Kent Carper, for one, said the cut would cost the county between $225,000 and $300,000 a year, and said he is asking the Legislature to provide a fiscal note showing the impact of the proposed cuts to all affected cities and counties.

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Filing deadline for the 2014 elections was midnight Saturday, but one name that won't be on the primary ballot is Margaret Kerr Beckwith, whose application to run for the state Senate in the 11th District was rejected by the Secretary of State's office on the grounds that Sen. Clark Barnes, R-Randolph, is a resident of the same county.

(Under state law, in multi-county senatorial districts, only one senator may be elected from each county.)

Beckwith contends that Barnes had been living in Buckhannon, which is also in the 11th, but in Upshur County, and on Jan. 10, changed his voter registration address to 42 Rosewood Drive in Montrose, Randolph County, which appears to be a fairly modest one-story frame house.

Barnes said Friday he has no idea what Beckwith is talking about.

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Finally, on the legislative activity calendar, the State Farm Insurance reception is Monday evening at the Marriott.